Keywords Studios eyes £2.2bn takeover by Swedish private equity giant EQT

  • Keywords has received a £35.50 per share offer from private equity firm EQT
  • EQT now has until 5pm on 15 June to declare a concrete offer or walk away 

London-listed video game services business Keywords Studios has confirmed it is in discussions regarding a potential £2.2billion takeover by EQT Group.

The Irish company has received a £35.50 per share offer from EQT, having rejected four previous proposals by the Swedish private equity firm.

It said the latest bid, a premium of more than 70 per cent to Keywords’ closing share price on Friday, represents a ‘significant increase’ on the initial approach and that it was ‘minded to recommend’ it to shareholders.

Fantasy land: Keywords Studios has worked on famous franchises including Fortnite, Assassin’s Creed, Pro Evolution Soccer, and The Legend of Zelda (pictured) 

Under City takeover rules, EQT now has until 5pm on 15 June to declare a concrete offer or walk away, although the deadline could be extended.

Keywords Studios shares soared 62 per cent to £23.82 by early Monday afternoon, making them the biggest riser on the AIM All-Share Index.

However, the group’s share price more than halved over the 18 months prior to the acquisition announcement due to concerns that artificial intelligence threatens its future.

Analysts at HSBC UK said the ‘market’s reaction to AI fears has been harsh,’ given that Keywords has invested in automation and adopted AI in game testing, player support and translation tools.

Keywords provides technical and creative services to most of the world’s prominent video game companies, including Microsoft, Ubisoft, Electronic Arts, and Activision Blizzard.

When Keywords floated on the London Stock Exchange in 2013, it had 120 staff and a market capitalisation of just £50million, but this has since grown to over 13,000 and around £1.9billion, respectively.

Its potential acquisition by EQT comes amid a renewed level of takeover activity involving London-listed firms, which are perceived as undervalued relative to their global peers.

In January, EQT bought veterinary products maker Dechra Pharamceuticals in a £4.5billion leveraged buyout deal.

Just in the past month, cybersecurity specialist Darktrace, satellite software business IQGeo Group, and music royalties investor Hipgnosis Songs Fund have all agreed to be bought by US private equity companies.

Mining giant Anglo American also received and turned down two approaches – the latter worth £34billion – from its much larger Australian rival, BHP Group.

Keywords Studios 

Situated in Dublin’s Leopardstown suburb, Keywords Studios was founded in 1998 by Giorgio Guastalla and his wife, Teresa Luppino.

The company started out offering translation services to business software firms before moving solely to working in the video games sector.

After Andrew Day became its chief executive in 2009, Keywords expanded through numerous acquisitions and a growing global popularity of computer games.

Among the famous franchises it has worked on include Fortnite, Assassin’s Creed, Pro Evolution Soccer, and The Legend of Zelda.